CFTC Staff Letter 14-137 (No-Action): Extension of No-Action Relief for Swaps Executed as Part of Certain Package Transactions

U.S. COMMODITY FUTURES TRADING COMMISSION
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CFTC Letter No. 14-137
No-Action
November 10, 2014
Division of Market Oversight
Extension of No-Action Relief from the Commodity Exchange Act Sections 2(h)(8) and 5(d)(9) and from Commission Regulation § 37.9 and Additional No-Action Relief for Swap Execution Facilities from Commission Regulation § 37.3(a)(2) for Swaps Executed as Part of Certain Package Transactions On May 1, 2014, the Division of Market Oversight (“DMO” or the “Division”) of the Commodity Futures Trading Commission (“Commission” or “CFTC”) issued a letter (“Package Transaction NAL 14-62”) to phase in compliance with Commodity Exchange Act (“CEA”)
section 2(h)(8) (the “trade execution requirement”) by granting no-action relief from the trade
execution requirement and CEA section 5(d)(9) and § 37.9 of the Commission’s regulations for certain interest rate and credit default swaps that have been made available to trade (“MAT”) and are executed as part of five specified categories of “package transactions.”1 Package Transaction NAL 14-62 provides this no-action relief for three of these categories until November 15, 2014 (“November 15 Packages”). 2 This letter provides further time-limited no-action relief 3 for swaps executed as part of the November 15 Packages.4 Generally, the letter provides this relief to entities or counterparties 1 See CFTC Letter 14-62 at 3 (definition of “package transaction” in Package Transaction NAL 14-62). The categories include package transactions in which at least one individual swap component is made available to trade (“MAT”) and therefore subject to the trade execution requirement; and (1) each of the other swap components is subject to the clearing requirement under CEA section 2(h)(1)(A) and § 50.4 of the Commission’s regulations (“MAT/Non-MAT Cleared Package Transactions”); (2) at least one individual swap component is under the Commission’s exclusive jurisdiction and not subject to the clearing requirement (“MAT/Non-MAT Uncleared Package Transactions”); (3) at least one individual component is not a swap (“MAT/Non-Swap Instruments Package Transactions”); or (4) at least one individual swap component is a swap over which the Commission does not have exclusive jurisdiction (“MAT/Non-CFTC Swap Package Transactions”). Package Transaction NAL 14-62 also provided no-action relief for package transactions in which each of the swap components has been made available to trade (and therefore subject to the trade execution requirement) and all other components are U.S. Treasury securities (“U.S. Dollar Swap Spreads”). The no-action relief expired for MAT/Non-MAT Cleared Package Transactions and U.S. Dollar Swap Spreads on June 1, 2014 and June 15, 2014, respectively. See CFTC Letter 14-62 at 4-7. 2 The November 15 Packages include MAT/Non-MAT Uncleared Package Transactions; MAT/Non-Swap Instruments Package Transactions, specifically excluding U.S. Dollar Swap Spreads; and MAT/Non-CFTC Swap Package Transactions. 3 This letter responds to no-action relief requested in the following: (1) Letter from International Swaps and Derivatives Association (“ISDA”), Request for Relief from the Trade Execution Requirement for Package Transactions (Oct. 14, 2014); (2) Letter from Managed Funds Association (“MFA”), Request for Relief from the Trade Execution Requirement for Categories of Package Transactions under CFTC Staff No-Action Letter